The Ultimate Guide to Unemployment Insurance Proposals for Singapore

In the recent Budget Debate 2016, Workers’ Party MP Sylvia Lim called for redundancy insurance to help the unemployed while they search for a job, and was subsequently thanked by People’s Action Party MP Patrick Tay for reiterating his call he had made for the past few years urging the government to look at unemployment insurance.

Or do we expect the government to provide unemployment welfare or benefits out of taxpayers’ money to tide the unemployed over? Then that’s not really considered insurance, is it?

We collated some of the thoughts about unemployment insurance from the different political parties in Singapore to take a look at the various proposals mooted over the last few years.

People’s Action Party

“In the financial industry, foreign banks tend to lay off employees in global restructuring exercises on an ongoing basis. Will such industries consider to include a more comprehensive suite of employment assistance for their employees?

This may come in the form of subsidies and payments to recognize their years of service (where possible to be negotiated with the union in a unionised environment) and at the same time help them upgrade or re-skill for their next job. In this way, it can act as a form of “unemployment insurance” to tide them over.”

“I thank Honourable Member Ms Sylvia Lim for reiterating my call since the past few years to consider and examine the issue of under-employment and unemployment insurance. …

On the part of the government, the ‘Adapt & Grow’ initiative should address our current challenges and the pressing needs of our workers especially our PMEs as we row across choppy waters. I have three suggestions.

(i) Enhancing the existing Career Support Programme (CSP) to give a boost to hire our Singaporean PMEs. This can be done by widening its outreach, stretching its coverage and deepening its assistance to all PMEs especially the mature PMEs as well as all PMEs regardless of age who have been retrenched or unemployed. …

(iii) Set-up a support network for these unemployed and retrenched PMEs so that they do not fall into a deadly spiral of despair and depression.”

Bottom line: PAP thinks it is more important to help the unemployed get jobs.

Workers’ Party

“To this end, the government should look into the feasibility of introducing redundancy insurance. One model could involve requiring workers resident in Singapore and their employers, to each contribute a very small % of the employee’s monthly salaries towards a fund. The fund should be geared towards helping workers who undergo involuntary unemployment, meaning those who were made redundant including those terminated with notice.

The fund could gear towards giving a 6-month payout at a fraction of the worker’s last drawn salary (say 40%), subject to a cap, say based on the median wage. Such a modest scheme, of limited payouts which end after six months, will send a clear signal that only a temporary buffer is being provided, incentivising the worker to actively prepare to earn his own income again.”

Bottom line: WP thinks getting payouts is more important than tackling unemployment.

SDP

“The SDP proposes a retrenchment insurance scheme called RESTART (Re-Employment Scheme and Temporary Assistance for the ReTrenched) for our workers who find themselves laid-off from work.

Here’s how it works:

If a worker is retrenched, RESTART pays him/her 75% of last drawn salary for 1st 6 months, 50% for 2nd 6 months, and 25% for final 6 months.

The payout stops once the individual is re-employed or 18 months after retrenchment.

The payout capped at the prevailing median wage (which is $3,770 as of 2014). This means that a retrenched employee earning $3,200/month would be paid $2,400 for the first 6 months and so on whereas an employee earning $5,000/month would get paid 75% of $3,770 for the first 6 months.

MOM will assist the retrenched individual to seek re-employment and help match his/her skill- and salary-level to new job where possible.

The individual can reject only up to 3 job offers.

Based on a 5% unemployment rate, we estimate RESTART’s budget to be $2 billion a year. This budget will come from

the state (80%), employers (10%) and workers (10%)

employees’ contributions are made on a sliding scale with the higher-income groups paying more

employers would match their employees’ contributions dollar for dollar

Such a hybrid system of financing would spread out the fiscal responsibility to all stakeholders.

To prevent abuse of the programme, those relieved of their work due to misconduct, resign from their jobs or worked with the company for less than a year will not be eligible for RESTART.”

Bottom Line: SDP expects the state to pay for unemployment welfare without thinking about sustainability.

SPP

Bottom line: SPP thinks a brief mention is enough to win votes.

Singaporeans First Party

“This safety net must have three basic elements namely a truly affordable universal and comprehensive healthcare insurance, unemployment insurance and an old age pension provided by the state outside of the inadequate CPF.

With massive financial surpluses accumulated in the last four to five decades, Singapore can provide this strong safety net”

Bottom line: Singfirst thinks that money drops from the sky.

People’s Power Party

“An institutionalized unemployment insurance system can act as a bumper to cushion off any rapid economic downturn by making sure that local consumption will not drop drastically in such event. This system could be financed by the great amount of foreign workers’ levies which the government has been collecting all these years.

It is only logical for the government to utilize levies imposed on foreign workers to help mitigate the potential loss of local citizens’ jobs due to the impact of the dependency on cheap foreign labour.”